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Regulators fine Wall Street firms $549 million for using WhatsApp and other channels to discuss business

By Matt Egan, CNN

New York (CNN) — Wells Fargo and a slew of other Wall Street firms admitted Tuesday to using WhatsApp, Signal and other messaging platforms for “off-channel” communications in violation of federal recordkeeping requirements.

The Securities and Exchange Commission said the Wall Street firms acknowledged wrongdoing and have agreed to pay penalties totaling $289 million.

The SEC said its investigation uncovered “pervasive and longstanding ‘off-channel’ communications” at Wells Fargo, BNP Paribas, SG Americas, BMO Capital Markets, Mizuho Securities, Houlihan Lokey, Moelis, Wedbush and SMBC Nikko Securities America.
According to regulators, those firms admitted that from at least 2019, their employees often communicated about business through WhatsApp, iMessage, Signal and other messaging platforms on their personal devices. The SEC said the firms violated federal securities laws by failing to maintain or preserve the “substantial majority” of these communications.

The settlement is the latest in a broader crackdown by regulators into how the industry failed to maintain and preserve electronic communications by using personal devices.

Another regulator, the Commodity Futures Trading Commission, also fined four of the same Wall Street firms for failing to maintain records and failing to supervise matters related to their businesses.

The CFTC hit Bank of Montreal with a $35 million fine and a $75 million fine each for BNP Paribas, Societe Generale and Wells Fargo.

The SEC also signaled more action may be on the way.

“We know that other SEC-regulated entities have committed similar violations, and so our work to enforce industry-wide compliance continues,” Sanjay Wadhwa, the SEC’s deputy director of enforcement, said in a statement.

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